B-128259, JUN. 25, 1956

B-128259: Jun 25, 1956

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BUREAU OF MINES: REFERENCE IS MADE TO YOUR LETTER OF JUNE 12. REQUESTING A DECISION AS TO WHETHER YOU ARE AUTHORIZED TO CERTIFY FOR PAYMENT A VOUCHER TRANSMITTED THEREWITH IN THE AMOUNT OF $262.65. COVERING A CLAIM BY THE GRINNELL COMPANY OF OREGON TO RECOVER DISCOUNT ALLEGED TO HAVE BEEN ERRONEOUSLY DEDUCTED IN MAKING PAYMENT UNDER AN UNNUMBERED CONTRACT DATED APRIL 6. INVITATION NO. 72-56 WAS ISSUED FOR THE PROCUREMENT OF A SPECIFIED NUMBER OF VALUE BODIES AND DIAPHRAGMS. TWO BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. EACH BIDDER WAS GIVEN THE AWARD FOR THE ITEMS ON WHICH IT BID. IT IS REPORTED THAT IN AWARDING THE CONTRACT IN THIS CASE. THE CONTRACTOR WAS PAID THE SUM OF $642.85 ON VOUCHER NO. 4005 ON APRIL 30.

B-128259, JUN. 25, 1956

TO MR. W. RULON LEE, AUTHORIZED CERTIFYING OFFICER, BUREAU OF MINES:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 12, 1956, REQUESTING A DECISION AS TO WHETHER YOU ARE AUTHORIZED TO CERTIFY FOR PAYMENT A VOUCHER TRANSMITTED THEREWITH IN THE AMOUNT OF $262.65, COVERING A CLAIM BY THE GRINNELL COMPANY OF OREGON TO RECOVER DISCOUNT ALLEGED TO HAVE BEEN ERRONEOUSLY DEDUCTED IN MAKING PAYMENT UNDER AN UNNUMBERED CONTRACT DATED APRIL 6, 1956.

IT APPEARS FROM THE RECORD THAT UNDER DATE OF MARCH 15, 1956, INVITATION NO. 72-56 WAS ISSUED FOR THE PROCUREMENT OF A SPECIFIED NUMBER OF VALUE BODIES AND DIAPHRAGMS, F.O.B. ALBANY, OREGON. TWO BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, ONE FROM THE GRINNELL COMPANY OF OREGON, BIDDING ON ITEMS 2, 3, AND 5, AND THE OTHER FROM THE ELECTRIC STEEL FOUNDRY COMPANY, BIDDING ON ITEMS 1, 4, AND 5. EACH BIDDER WAS GIVEN THE AWARD FOR THE ITEMS ON WHICH IT BID.

THE BID OF THE GRINNELL COMPANY OF OREGON INDICATED A DISCOUNT OF 30 PERCENT FOR PAYMENT WITHIN 30 CALENDAR DAYS. IT IS REPORTED THAT IN AWARDING THE CONTRACT IN THIS CASE, THE CONTRACTING OFFICER RAISED NO QUESTION AS TO WHAT WOULD NORMALLY APPEAR TO BE AN EXCESSIVE DISCOUNT. THE CONTRACTOR WAS PAID THE SUM OF $642.85 ON VOUCHER NO. 4005 ON APRIL 30, 1956, REPRESENTING THE NET AMOUNT DUE FOR ITEMS 2 AND 3 AFTER DEDUCTING A 30 PERCENT DISCOUNT FROM THE GROSS AMOUNT OF THE CONTRACTOR'S INVOICE FOR $918.36.

THE GRINNELL COMPANY OF OREGON CLAIMS THE AMOUNT YET DUE IT FOR ITEMS 2 AND 3 IS $262.65, STATING THAT THE DISCOUNT TERMS STATED IN THE BID INVITATION WERE ERRONEOUS AND RESULTED FROM A TYPOGRAPHICAL ERROR. SUPPORT OF ITS CLAIM, THE CONTRACTOR FURNISHED ITS WORKSHEET ON INVITATION NO. 72-56, INDICATING A 2 PERCENT DISCOUNT FOR PAYMENT WITHIN 30 DAYS.

IT IS UNUSUAL FOR A BIDDER TO OFFER A DISCOUNT OF 30 PERCENT FOR PAYMENT WITHIN 30 CALENDAR DAYS, WHEN NO DISCOUNT IS OFFERED FOR PAYMENT WITHIN 10 OR 20 CALENDAR DAYS. FURTHERMORE, THE OFFERED DISCOUNT APPEARS TO HAVE BEEN SO OUT OF LINE WITH NORMAL COMMERCIAL PRACTICES THAT THE CONTRACTING OFFICER SHOULD HAVE TAKEN NOTICE OF PROBABLE ERROR, AND REQUESTED VERIFICATION BEFORE AWARD. ACCORDINGLY, THE BID AND CONTRACT MAY BE CONSIDERED AS CORRECTED TO SHOW A DISCOUNT OF TWO PERCENT AS INTENDED, AND PAYMENT MAY BE MADE ON THAT BASIS. HOWEVER, SINCE THE CONTRACTOR'S ERROR WAS RESPONSIBLE FOR THE DELAY IN PAYMENT OF THE BALANCE DUE, WE BELIEVE THAT THE TWO PERCENT DISCOUNT SHOULD BE TAKEN ON THE GROSS AMOUNT OF THE ORIGINAL INVOICE. UPON CORRECTION IN THAT RESPECT, THE VOUCHER WHICH IS RETURNED HEREWITH, MAY BE CERTIFIED IF OTHERWISE CORRECT. A COPY OF THIS DECISION SHOULD BE ATTACHED TO THE VOUCHER IN MAKING PAYMENT.